Commenting on the reasons for the new US decision to impose double tariffs on imported goods from China, Dr. Nozar Shafii said the volume of US-China trade is about $700 billion a year of which about $150 billion is the share of US exports to China and about $550 billion is for export of Chinese goods to the United States. Suppose if trade ties between the two countries were cut off which side would make more losses?
He explained: “In business debates, there are two levels that are examined: One is the horizontal level, which relates to the number and volume of goods traded between the two countries; and the other is the vertical level, which examines which countries are likely to benefit more from this trade. When we look at numbers and figures, we will see that while it is a lose-lose game, the Chinese will lose more than the Americans.”
He added: “The point is that it must become clear that the event described as a trade war or tariffs war is economic or political. At first glance, the conflict is economic, especially since Trump is a business-minded individual and his analyses and attitudes are at the micro-level. But here, the Washington-Beijing dispute is politically motivated in essence and must be analyzed from the perspective of international politics rather than the perspective of international and bilateral economics.
He said China-US rivalry is escalating day by day with each side trying to become the dominant power. He added experts are analyzing this issue within the framework of some theories, including “balance of power”, “power cycle” and “offensive realism.” All the three theories are from “neo-realism” family.
The problem is that China’s power is increasing day by day, narrowing the field for Americans in the same way, Shafii said. Americans know that the source of China’s military capability growth is its economic potential. If China’s military capability is to be restricted, its economic capability must be confined. So when Americans impose tariffs on Chinese goods and prevent Beijing from earning $550 billion, they reduce China’s military capability. Because a strong Chinese economy will support a strong Chinese military capability. This is tantamount to putting the US under pressure and strip it of its hegemonic position.
The university lecturer noted that the conflict between the two countries is much deeper and more strategic than it seems. About the actions China can take in response to the US, he said: “First we must see what approaches could the US adopt towards China. It can create military conflict or pursue “barrier making” and “containment policy” in the form of various alliances and coalitions against China. The US, of course, works very much on this issue. It can also follow China’s partnership in the leadership of the world, which is called “theory of responsibility”. It means giving China responsibility and China accepting it.
Shafii said China can also respond in several areas. It can counteract and impose tariffs on the $150 billion of goods it buys from the United States. It can also affect US interests elsewhere in different ways; for example, the Chinese can seize and exploit opportunities in the Persian Gulf dispute between the US and Iran; and they do, that is they apply their policies through the words they express.
He explained: “They feel the pressure on the Americans is increasing as the tensions in the Persian Gulf escalate, and this double pressure will cause the United States to reduce its pressure elsewhere. The Chinese are not reluctant to engage Iran and the US in the region, especially as they would like to engage the United States with more concerns so that Washington would pay less attention to East Asia.”
The university lecturer believed that East Asia, as well as North Korea’s card, were other tools in China’s hands to put pressure on the US. He noted: “As much as the US seeks to contain China, North Korea is also a force that can make this containment vulnerable. As you can see, North Korea is testing missiles and has resumed its threats to influence the containment that comes around China. Anyways, North Korea’s behaviour has had a complex impact on regional security.”
According to Shafii, another issue is the World Trade Organization whereby China could use legal ways to pursue its interests and accomplish them. This, of course, is a difficult course to take. Yet another point is closer proximity to Russia. The United States has interests that can be threatened by Russia. Expansion of Russian influence in Eastern Europe is one such threat. So Russia can be active in this field and can operate effectively in strategic competitions in the area of ballistic missiles.
“The more the element of power moves in favour of China in different regions, the more it reacts against the United States,” he said. So we have to look at China’s reaction as a wide range outside mere customs tariffs.
About China’s stance that it is not afraid of a trade war with the United States, Shafii said: “The Chinese understand why these pressures are applied and tend to be very patient and take a peaceful approach along this path.”
“They know that any insecurity, whether in the form of a trade or military war, and military tensions and friction will end up to China’s disadvantage. China needs a quiet and peaceful environment to grow and become a great power. The Chinese are trying to pursue a policy of patience and persistence trying to resolve the issue in a way that Americans do not want to be fulfilled by halting the trend of Beijing’s growth.